State House has rebutted reports that President Museveni had appointed former Prime Minister John Patrick Amama Mbabazi, a 73 year old, to serve as the new Central Bank Governor.
Reports started circulating on weekend—suggesting that Mr. Mbabazi, a lawyer and a politician who served as the ninth Prime Minister of Uganda from 24 May 2011 to 19 September 2014 had been named as Prof Mutebile replacement.
President Museveni’s junior Press Secretary Farouk Kirunda has dismissed the reports as fake.
“It is not true that H.E the President has appointed a new Governor, BOU. In case such an appointment is made, the public will be informed through official channels. FK,” Kirunda said in a tweet.
Prof. Emmanuel Tumusiime Mutebile, an economist with a no-holds-barred approach to handling the task and administrative functions of the Central Bank died at the start of 2022 and President Museveni’s failure to appoint a new Governor for the Bank of Uganda has reportedly left the institution exposed.
Deputy Governor Michael Atingi-Ego has reportedly failed to stamp his authority on the institution.
Industry sources have told this website that the acting Governor, Dr. Atingi-Ego lacks crowning abilities including personal courage and leadership skills to head the country’s economic revival from a thread of economic downturns including the Covid-19 tragedy.
BoU has since increased the Central Bank Rate (CBR) by another percentage point to 8.5 percent and has since
encouraged commercial banks to raise interest rates for borrowers, a development that has since puzzled financial experts.
Dr. Atingi-Ego has defended his measures saying the increase was necessary to stabilise inflation but industry experts and borrowers have since hit back the Central Bank—describing BoU inflation containment measures as jeopardizing the already disastrous environment especially for small businesses.
“Remember that when local businesses fear to borrow from banks because of the rise in interest rates, production will be low, which means the Uganda Revenue Authority (URA) will collect less tax revenue at the end of the day. And some banks are losing business as well, in the name of following BoU’s claim of taming inflation,” a top economist said, adding:
“We also know BoU is also behind the idea that the government should not subsidize commodities such as fuel, arguing that it is not sustainable in the long-run. At least Atingi has made this view known in the recent fora that he has participated in. Question for Atingi is, “Who should save Ugandan citizens from the high prices of fuel and other essential commodities? We know that other governments in the EAC where Ugandans belong have subsidized fuel, knowing that it plays an important part in the economy.”
“Does Atingi and others who anti-subsidization know that some people have parked their vehicles at home because they cannot afford fuel, for example?”
Other economists have also called out the acting governor, reminding him that Finance Ministry had already sent lesser monies to government ministries, departments and agencies for the first quarter of Financial Year 2022/23 and that his containment measures including raising CBR were “absolutely unnecessary”.
This means that the common man will not be able to have all his goods and services procured by the government, as the government agencies will be cautious to spend because of the little money received”.
The Ministry of Finance last week slashed cash releases to institutions and local governments by over Shs4 trillion—a move explained by Finance Permanent Secretary Ramathan Ggoobi as aimed at taming rising prices of goods.
Shs8 trillion was supposed to be released in the first quarter.
Another industry source told this website on Wednesday July27 2022 that the acting BoU governor has since failed to brainstorm new methods of supervising commercial banks and that he was still relying on Prof Mutebile’s template.
“We know that the BoU supervision role under Mutebile was not effective as some banks collapsed while others were closed unfairly- Crane Bank Limited, National Bank of Commercial and Global Trust Bank Uganda, all now defunct are the examples,” a top economist said.
Prof. Mutebile in 2019 admitted that his methods were not effective and that they had errorously led to Banks insolvency or failures.
The financial experts in the country recently said the exit of Afriland from the Ugandan market showed weakness of BoU.
BoU, they said, is supposed to ensure that banks remain operating in the country because they help in tax revenue, provision of direct and indirect jobs as well as offering loans to individuals and government, but Dr. Atingi did not show any remorse when Afriland Bank recently exited Uganda.
“What new measures has he (Atingi) put in place to ensure that Uganda does not lose more banks,” a retired financial expert who once worked in government asked.
Relatedly some economists are also wondered why Dr. Atingi is planning to control some SACCOs, even when commercial banks still have issues of supervision.
They say Dr. Atingi and other government officials now want to kill the spirit of SACCO members who do things their own way and have been surviving.
Big SACCOS like Wazalendo, EXODUS SACCO and others are not happy that BoU wants to control them since they were already under Uganda Microfinance Regulatory Authority (UMRA), which, according to some sources, is about to be scrapped by government, yet it was important in handling SACCOs.
“What does BoU want from us? We have been surviving without their involvement for years and we are growing. Let them concentrate on banks,” said an executive of one of the biggest SACCOs in western Uganda.
He said that BoU’s greed of wanting to control SACCOs will lead to poor business as borrowing terms and conditions are likely to change, pushing the poor people into poverty. “There is a way we do our business as SACCOs. We fear that BoU could kill our systems,” he said.